New York attorney general files lawsuit to dissolve NRA after investigation reveals fraud

New York attorney general files lawsuit to dissolve NRA after investigation reveals fraud
Source: Bloomberg via Getty Images

On Thursday, New York Attorney General Letitia James filed a lawsuit seeking to dissolve the National Rifle Association (NRA), after an 18-month investigation revealed evidence of fraud and self-dealing.

The lawsuit was filed in the New York State Supreme Court and it alleges that the powerful guns rights group has been “a breeding ground for greed, abuse, and brazen illegality.”

The lawsuit states that the top executives at the NRA violated state and federal law by using charitable funds for personal gain, contributing to a loss of US$64 million from the organization over a period of three years. It also accuses them of signing off on fraudulent and misleading account reports and statements.

The lawsuit names the chief executive officer of the NRA, Wayne LaPierre, general counsel John Fraser, the NRA’s former treasurer Woody Phillips and its former chief of staff, Joshua Powell. It requests that the court bar the four men from ever serving in a leadership position in a New York charitable organization.

The lawsuit further asks the court to order the four men to pay back the funds they have stolen from the organization.

James’ office said in a statement, “The NRA’s influence has been so powerful that the organization went unchecked for decades while top executives funneled millions into their own pockets. The NRA is fraught with fraud and abuse, which is why, today, we seek to dissolve the NRA, because no organization is above the law.”

The organization is a powerful ally of President Donald Trump. In 2016, it spent millions of dollars on Trump’s election campaign. It currently has a membership of five million people.

Allegations against NRA CEO Wayne LaPierre

The lawsuit accuses the NRA chief executive officer of having used charitable funds for his own personal benefit for nearly 30 years, including arranging a US$17 million post-employment contract for himself without board approval.

The lawsuit further claims that LaPierre used charitable funds to reimburse US$1.2 million worth of personal expenses such as travel, gifts for friends and family and memberships at golf clubs and hotels.

It adds that LaPierre spent US$500,000 of the organization’s funds on private flights to the Bahamas for himself and his family over a three-year period. LaPierre also allegedly spent an additional US$3.6 million of NRA money on private travel consultants who arranged private flights and executive car service for his vacations.

In April 2019, LaPierre forced out former NRA President Oliver North after North pushed for an internal financial review.

Allegations against other executives

The lawsuit accuses the NRA’s former treasurer Woody Phillips, who was responsible for managing the organization’s finances, of lying on financial disclosure forms, arranging a contractual deal worth more than US$1 million for his girlfriend and a contract worth US$1.8 million for himself before his retirement.

According to Phillips’ contract, he was paid the money to provide consultation to the new treasurer. However, James’ investigation revealed that no such consultation was provided.

The lawsuit further states that the annual salary of the NRA’s former chief of staff, Joshua Powell, more than tripled from US$250,000 to US$800,000 in only three years for being a “LaPierre loyalist.”

Powell obtained an additional US$100,000 as a housing allowance he was not entitled to and also obtained money for his father and his wife through NRA contracts.

Finally, the lawsuit accuses general counsel John Fraser of certifying false or misleading annual financial statements and ensuring that the NRA was governed well and didn’t break any federal or state laws.

NRA’s relationship with its former advertising firm Ackerman McQueen

The lawsuit states that LaPierre and the other executives diverted charitable funds from the NRA through its advertising agency Ackerman McQueen. This allowed LaPierre to not report hundreds of thousands of dollars in additional personal income to the Internal Revenue Service.

The goal of the executives was to not let other employees at the NRA know that the executives were funneling funds to Ackerman McQueen for their own personal benefit. The advertising agency would then bill the NRA for these large sums of money, claiming that they were “out-of-pocket expenditures” related to their advertising work for the NRA.

The lawsuit found that Ackerman McQueen was paid more than US$70 million in 2017 and 2018 for its advertising work, which included these “out-of-pocket expenditures.”

After the investigation by James began in February 2019, the NRA severed its relationship with Ackerman McQueen and sued the agency in April 2019, accusing it of concealing the details of the roughly US$40 million the NRA paid it each year.

The NRA’s response

The NRA responded on Thursday by filing its own lawsuit against James, accusing the attorney general of violating the organization’s free speech rights.

NRA President Carolyn Meadows said in a tweeted statement, “This was a baseless, premeditated attack on our organization and the Second Amendment freedoms it fights to defend.

“You could have set your watch by it: the investigation was going to reach its crescendo as we move into the 2020 election cycle.

“It’s a transparent attempt to score political points and attack the leading voice in opposition to the leftist agenda.”

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